Analysts warn that Trump's demand for tariffs on the purchase of Greenland jeopardizes the status of the dollar as the reserve currency.

Source: Yellow Original Title: Analysts warn that Trump’s demand for tariffs on Greenland purchase risks the dollar’s reserve currency status

Original Link: Global markets are once again preparing for volatility after President Trump announced a new round of tariffs on several European countries, explicitly linking the measures to his demand for the acquisition of Greenland.

Although investors have largely treated the measure as another iteration of the well-known trade war tactics, analysts warn that the underlying goal introduces geopolitical risks far greater than those of previous tariff episodes.

The announcement includes a 10% tariff on imports from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland starting February 1, with rates rising to 25% in June if negotiations fail.

Trump has stated that tariffs will remain in effect until a “full and complete purchase of Greenland” is secured.

Markets focus on tactics, not the goal

The use of tariffs as leverage in negotiations is well documented.

Previous episodes, such as the October 2025 tariff threat against China, followed a familiar pattern: initial heavy sell-offs in markets, intensified rhetoric over the weekend, and subsequent relief rallies as talks progressed.

Investors have increasingly viewed these moves as episodic shocks rather than structural threats.

This time, however, the goal is fundamentally different. Greenland is a semi-autonomous territory of Denmark, a NATO member and close ally of the United States.

Linking trade sanctions to territorial acquisition shifts the dispute from trade negotiations to the realm of alliance politics.

This difference has not yet been fully reflected in market valuations, according to several geopolitical analysts, who argue that investors may be underestimating the potential consequences if the dispute escalates beyond rhetoric.

A direct test for NATO and the EU unity

European officials privately indicated that tariffs linked to Greenland would trigger a coordinated response rather than bilateral negotiations.

According to European Union trade rules, any action against individual member states effectively becomes an EU-wide issue, increasing the likelihood of collective retaliation.

More critically, an attempt to coerce a NATO ally over territory risks undermining the alliance’s core principle of mutual defense.

Although no military action has been announced, even the perception of territorial pressure could accelerate European efforts to reduce dependence on U.S. security guarantees and financial infrastructure.

Confidence in the dollar and long-term market risk

Longer-term concerns go beyond trade flows.

Analysts point out that a sustained conflict with Europe could weaken foreign confidence in U.S. Treasury bonds and the dollar’s role as the global reserve currency.

Unlike previous trade disputes with China, which developed between strategic competitors, this episode directly challenges relationships underpinning global financial stability. For now, markets seem to be operating based on tactics rather than the stated objective.

Maintaining this approach may depend on how seriously European leaders take the demands in the coming weeks.